Nobody  is  a Prophet  in.  his  own  Country. 

* 

d-e  H“rwbi\ 


NEW  YORK : 
1873. 


B ~Yy\  \ 


UNITED  STATES  FINANCES. 


NOBODY  IS  A PROPHET  IN 


HIS  OWN  COUNTRY 


Mv  plan  is  to  demonstrate  how  to  come  to  specie  payments  by  fol- 
lowing the  honorable  rule  of  other  nations  : of  France  in  the  Prussian 
war ; to  the  credit  of  legal  tender  instead  of  repudiating  it,  and  ex- 
changing it  for  another  money  at  a discount,  and  that,  too,  in  the  ad- 
ministrations of  the  same  government;  how  to  save  many  millions  in 
interest  on  the  public  debt,  and  abolish  at  least  double  the  amount  so 
economized  in  taxes,  leaving  only  Custom  Houses ; how  to  oppose  the 
increasing  exterior  debt  by  reducing  or  annulling  the  contrary  balance 
of  commerce,  and  thus  promote  the  wealth  of  this  country ; how  to 
protect  national  industry  efficaciously  by  reducing  the  cost  of  the  most 
important  element;  salary,  with  equal  or  greater  saving  foi  the  laborer, 
and  especially  agriculture,  which  furnishes  the  pioducts  of  the  earth, 

and  of  metals.  , ,,  . , , 

All  that  can  be  realized  quietly  and  naturally,  by  following  the  right 
principle  in  the  examples  of  other  nations ; of  Great  Britain,  which,  in 
1844,  was  in  the  same  chaos  in  which  the  United  States  are  now,  and 
which,  having  less  life,  no  railroads  to  build,  etc.,  was  saved  thiough 
the  persuasion  of  their  League,  through  their  apostles,  Cobden,  Smith, 
and  others,  and  through  their  organ,  the  Economist. 

I will  propose  to  you  nothing  that  is  new,  or  that  I have  invented ; 
but  I was  in  England  in  1844,  and  from  then  to  1855  I always  studied 
the  Economist , saw  the  reforms,  and  the  contemporaneous  immediate 
effects. 


2 


To  form  the  basis  of  the  most  important  economical  revolution,  you 
want  no  particular  legislation. 


I. 

Be  pleased  to  take  into  consideration  that  the  necessity  of  paying  the 
interest  on  your  public  debt,  in  gold,  forced  you,  during  your  abnormal 
circumstances  (which  have  passed  entirely),  to  exact  the  payment  in 
gold  of  your  Custom  House  duties.  But  as,  during  Grant's  adminis- 
tration, the  interest  on  the  public  debt  has  been  reduced  twenty-three 
millions,  you  could  have  reduced  the  proportion  of  gold  required,  re- 
ceiving in  part  payment  legal  tenders,  instead  of  selling  the  surplus  at 
a premium,  in  exchange  for  your  legal  tenders,  which  is  as  dishonor- 
able as  if  a banker  was  changing  his  bills  of  exchange  for  others  at  a 
loss  in  the  difference.  You  have  been  giving  an  artificially  higher  value 
to  the  bonds  you  have  bought  and  redeemed ; the  profit  has  been  noth- 
ing, and  the  discredit  of  your  legal  tenders  has  been  the  only  effect. 
Meanwhile,  you  have  had  the  good  example  in  the  Franco-Prussian 
war,  of  the  French  nation  admitting  as  good  money  into  its  own  ad- 
ministrations the  notes  of  the  Bank  of  France  at  par ; and  in  conse- 
quence gold  never  got  to  a higher  premium  than  1J  per  cent.,  which  is 
extremely  creditable,  when  we  take  into  consideration  that  the  United 
States  are  producers  of  gold,  and  France  is  not.  If  you  have  exported 
during  the  three  months  of  this  year  14^  millions,  it  is  only  58  millions  a 
year.  To  reduce  the  gold  required  to  pay  the  Custom  House  duties  to  only 
two  thirds,  or  half,  and  complete  the  amount  with  legal  tenders,  and  gra- 
dually to  increase  the  proportion  of  legal  tenders  received  would  be 
the  best  plan  at  once ; and  then  to  prepay  without  rebate  the  interest 
due  on  the  first  of  May,  to  reduce  the  demand  for  gold  for  the  most 
important  daily  transactions.  For  the  speculators  the  effect  would  be 
the  same,  whether  gold  moved  from  4 to  7 or  from  12  to  15  per  cent. 
You  could  reduce,  too,  five  per  cent.,  the  intrinsic  value  of  your  double 
eagles.  The  same  if  the  par  value  of  sovereigns  in  your  Customs  is 
$4  86,  so  it  was  to  be  in  the  exchanges. 

But  as  you  would  want  special  legislation  for  that  change,  instead  of 
buying  bonds  one  day  of  the  week,  and  on  another  selling  gold,  rather 
buy  bonds  and  pay  in  gold  at  par,  thus  realizing  the  difference  in  the 
smaller  cost  of  the  bonds.  This  plan  would  be  more  honorable,  and 
would  save  trouble. 

But  if  you  desire  absolutely  to  continue  both  transactions  in  order 
to  take  legal  tenders  with  one  hand  and  return  them  the  next  day 
with  the  other,  then  the  surplus  of  gold  that  you  do  not  want  for  pay- 
ing the  interest  of  your  debt  should  be  sold  at  par , without  any  pre- 
ference, even  to  the  importers,  who  deserve  some  preference.  Then  if 
you  must  sell  one  million  gold,  divide  the  amount  into  twenty  lots,  of 
$50,000  each,  and  if  instead  of  twenty  bids  you  have  forty,  put  all  the 
names  into  a box,  and  the  first  twenty  drawn  out  should  have  the  privi- 
lege of  the  twenty  lots. 

The  Secretary  of  the  Treasury  can  alter  the  form  of  sales  of  gold 
without  the  aid  of  any  special  legislation.  That  this  is  to  the  credit  of 
the  Government,  I have  proved. 


3 


II. 

I must  now  prove  the  other  advantages  that  the  country  can  derive. 

You  are  taking  great  trouble  in  refunding  part  of  yonr  public  debt 
with  the  object  of  reducing  one  per  cent,  of  the  interest.  Why  not 
aspire  to  refund  a greater  portion  in  another  debt  which  would  bear  no 
interest,  and  thus  save  the  total  six  per  cent.  ? This  can  be  done  by 
legally  abolishing  a monopoly  which,  instead  of  benefiting  the  National 
Banks,  gives  them  a smaller  amount  of  deposits  (of  which  they  can  use 
three  quarters)  than  what  they  could  receive. 

My  plan  is  this  : As  soon  as  the  effect  of  reducing  the  proportion  of 
gold  required  to  pay  Custom  House  duties,  or  of  the  changes  in  the 
form  of  returning  to  the  market  the  surplus  of  gold,  is  obtained; — or 
better,  simultaneously,  you  should  call  to  payment  twenty  millions  of 
the  series  of  Five- twenty  Bonds  now  held  by  the  National  Banks  on 
deposit  as  a guarantee  for  their  bank  notes.  You  should  propose  to 
them  in  due  time,  not  at  once,  either  to  take  gold  notes  or  legal  tenders 
at  the  current  prices,  on  the  day  of  payment.  Their  patriotism  and 
interest  would  lead  them  to  take  legal  tenders.  Then  you  should  issue 
legal  tenders  to  the  amount  required,  and  as  you  can  issue  fifty-four 
millions,  you  want  no  particular  legislation.  You  could  repeat  the  call ; 
and  if  you  could  agree  with  the  banks  for  the  total  of  three  hundred 
and  thirty  millions  remaining,  you  would  save  twenty-one  millions  in- 
terest. The  issue  of  two  hundred  and  thirty  millions  legal  tenders 
would  replace  an  equal  amount  of  bank  notes  which  would  be  can- 
celled. 

The  monopoly  if  producing  twenty-one  millions  to  the  banks  now 
costs  the  people  necessary  taxes,  not  only  for  the  equivalent,  but  also 
for  the  expense  of  collecting  them.  Probably  forty-two  millions  are 
required  in  taxes  to  have  a net  of  twenty-one ; and  thus  by  abolishing 
the  monopoly  forty-two  millions  taxes  could  be  abolished.  I should 
always  propose  to  abolish,  as  reduction  by  keeping  up  the  cost  of  col- 
lection, produces  comparatively  little  effect. 

In  regard  to  the  banks,  I should  respect  their  liberty  about  the  form 
in  which  they  would  receive  deposits ; the  form,  the  engravings,  the 
color  of  the  paper,  and  the  nomination  of  their  notes  or  bills,  at  the 
discretion  of  the  depositors. 


III. 

It  is  understood  that  for  issuing  more  than  fifty-five  millions  of  legal 
tenders,  you  require  special  legislation ; and  as  the  matter  is  worthy 
you  can  call  a meeting  of  Congress,  and  have  there  the  personal  advice 
of  the  Secretary  of  the  Treasury. 

You  could  be  authorized  to  issue  as  much  in  legal  tenders  as  you  re- 
quire to  buy  five-twenties  at  the  price  of  par  gold. 

Suppose  that  in  the  course  of  one  year  they  would  offer  you  as  much 
as  two  hundred  millions  bonds,  you  could  refund  that  much  into  a debt 
that  would  pay  no  interest,  and  you  would  save  another  twelve  millions. 
But  as  the  last  year  you  have  been  able  to  pay  for  one  hundred  millions, 


4 


besides  the  interest,  you  would  only  require  to  issue  100  millions  in 
legal  tenders,  45  more  than  the  55  that  you  are  authorized,  and  if  the  tran- 
sition is  in  two  years,  no  additional  issue,  or  only  a temporary  one 
would  be  required.  As  the  country  has  grown  in  wealth,  in  population, 
in  business,  and  is  increasing  yearly,  there  is  no  fear  of  inflation  ; the 
tariff  could  check  it,  as  I shall  prove.  The  West  and  South  want 
currency. 

The  saving  of  thirty-three  millions  interest  will  permit  you  to  abolish 
sixty-six  millions  of  taxes.  Such  a saving  made  by  the  community 
would  return  in  increasing  consumption,  enterprise,  etc.,  probably 
thirty  millions,  and  in  this  expectation  you  could  come  to  only  the  tax 
of  Custom  Houses,  and  be  at  ease  about  a public  debt  that  costs  no  in- 
terest. If,  notwithstanding  the  present  actual  burden  of  taxation,  the 
country  prospers,  without  it  it  will  prosper  still  more.  If  you  have  had 
100  millions  surplus,  abolish  for  so  much,  and  you  will  only  have  one- 
half  difference,  if  properly  done. 

You  could  in  one  year  accomplish  the  refunding  of  550  millions  of 
your  public  debt  into  another,  paying  no  interest,  and  requiring  for  that 
purpose  an  apparent  amount  of  100  millions  increased  circulation,  but 
really  only  one-half,  and  nothing  if  the  transaction  should  extend  over 
two  years. 


IV. 

I have  said  that  any  inflation  can  be  checked  by  the  tariff,  and  that 
brings  me  to  a capital  question.  I desire  to  protect  national  industry 
efficaciously  ; instead  of  givingwith  the  right  hand  an  over  price  by  put- 
ting forty-eight  dollars  duty  on  what  can  be  bought  abroad  for  (100) 
one  hundred,  and  forcing  the  consumer  to  pay  148  instead  of  100;  and 
taking  the  same,  or  more,  with  the  left  hand  from  this  so-called  pro- 
tected industry.  By  franchise  instead  of  prohibitions,  or  almost  pro- 
hibitions, I should  protect  the  most  sacred  and  innate  of  all  liberties, 
that  of  buying  where  you  can  buy  cheaper,  and  selling  with  the  same 
reciprocal  advantage  the  products  of  agriculture.  As  this  wealth  de- 
termines your  capacity,  I should  protect  agriculture,  since  in  any  way 
that  taxes  are  combined  it  pays  them  eventually. 

See  your  actual  circumstances  : In  the  last  three  years  your  imports, 
including  gold,  have  exceeded  your  exports,  including,  too,  gold  and 
silver,  sixty-eight  millions  in  an  annual  average  of  22f  millions.  Your 
exterior  debt,  represented  by  U.  S.  five-twenties  and  other  bonds  of 
States,  cities,  railroads,  and  other  corporations,  amount  to  three  thou- 
sand millions  (3,000,000,000),  and  you  must  pay  every  year  two  hundred 
millions  (200,000,000),  by  sending  more  and  more  bonds,  etc.  Govern- 
ment and  enterprises  all  refer  to  the  same  family,  which  is  increasing 
the  total  exterior  debt  one  thousand  millions  every  four  years.  You 
export  less  and  less  amounts  of  certain  manufactures  as  a proof  that  the 
consequences  of  the  protective  system  neutralize  in  excess.  Protected 
industry  can  compete  less  and  less,  and  is  yearly  decreasing  in  exports. 
Deprived  even  of  the  liberty  of  buying  vessels,  you  are  paying  thirty 
millions  freight.  Your  immigrants  bring  twenty  millions,  and  your  rich 
absentee  excursionists  take  as  much,  or  more. 


I agree  with  you  that  part  of  the  increasing  debt  represents  new  en- 
terprises, but  it  would  be  better  to  accomplish  the  same  ends  without 
increasing  the  exterior  debt,  by  increasing  the  products  of  the  earth 
and  the  exports,  and  by  giving  to  national  industry  the  great  element 
to  compete  and  export.  This  great  element  is  salary.  The  rate  of 
salary  must  correspond  to  the  cost  of  living.  This  corresponds  with 
the  plan  of  the  tariff  and  the  amount  of  taxation.  If  the  laborer  gets 
$10,  and  requires  $10  to  live,  he  saves  nothing;  better  to  get  $7  and 
need  only  $5,  thus  saving  $2.  National  industry  paying  $7  in  wages 
can  compete,  and  paying  $10  cannot.  Both  industry  and  laborers  would 
be  benefitted  by  the  change,  and  the  element  for  competing  would  be 
efficacious  protection.  The  saving  made  by  every  one  would  be  used 
by  the  same  persons  in  greater  consumption,  or  in  enterprise,  or  in 
capitalization. 

Now  your  exports  are  mostly  Cotton,  Petroleum,  and  Gold,  etc., 
which  are  in  great  part  products  of  the  South.  Only  one  quarter  of 
your  total  exports  is  represented  by  Cheese,  Hams,  Breadstuffs,  etc.  etc. 
You  could  hope  to  increase  your  exports  of  produce  and  manufactures 
to  meet  the  total  of  your  imports  as  well  as  the  interest  of  your  exterior 
debt.  You  have  different  climates  for  varied  products.  You  have  been 
favored  by  nature  with  natural  communications  by  rivers  abundant  as 
seas ; you  produce  the  raw  materials  of  cotton,  wool,  leather,  iron,  steel, 
coal,  etc.,  and  can  situate  your  manufactories  in  the  producing  centres. 
Europe  must  transfer  cotton  and  pay  freight  and  duties,  and  again  when 
returning  manufactures;  and  besides  that,  they  must  pay  an  import 
duty  that  might  be  of  15  per  cent,  on  the  invoice  cost,  ad  valorem.  You 
are  geographically  better  situated,  intermediate  to  the  two  worlds,  and 
can  you  permit  yourselves  to  hear  that  your  chiefs  of  industry  are  less 
capable  as  men  to  sell  at  an  equal  or  less  value  ? Follow  the  example 
of  Great  Britain,  for  instance,  and  by  the  same  system  you  would  be 
able  to  go  further.  Now  with  your  old  Chinese  system  of  tariff,  you 
are  prospering,  notwithstanding  what  would  ruin  any  other  country. 

Cuba,  without  so  many  advantages,  has  also  prospered,  notwithstand- 
ing its  government,  and  has  increased  the  amount  of  its  exports  more 
than  you  have  done  ; Cuban  exports  on  surplus  represents  100  millions 
in  proportion  to  1,350,000  inhabitants,  say  2,900  millions,  if  correspond- 
ing with  your  population  of  forty  millions,  producing  as  they  are  in 
fighting  their  liberties  seven  times  more  than  what  you  do  now.  They 
are  really  heroic,  as  the  producers  in  Cuba  are  forced  to  sell  their  sugar 
at  ten  reals  on  an  arrobe,  say  five  cents  a pound  there,  instead  of  double 
that  which  your  producers  get,  as  they  have  to  pay  no  import  duty  to 
lose  nothing  in  exchanges  and  freights.  All  that  difference  in  price  for 
the  producers  is  due  to  your  retaliatory  act  of  navigation  of  1834. 
Europe  has  not  been  liberal  with  Cuba,  giving  to  it  population  and 
capital,  because  Cuba  inherited  not  your  language  nor  education.  It  has 
only  had  a mother  of  sixteen  millions  inhabitants  living  on  the  pillage 
of  the  colony,  either  government,  industrial,  or  individual. 

In  regard  to  you,  instead  of  the  five  millions  which  the  royal  family 
of  Great  Britain  costs,  you  pay  500  millions  a year  to  your  royal  (?) 
families  in  the  over  prices  of  protected  industry,  putting  twelve  dollars 
average  contribution  on  every  inhabitant,  and  your  government,  instead 


6 


of  giving  you  everything  required  as  a necessary  for  living  cheap,  as 
does  Great  Britain,  combines  taxation  so  as  to  make  everything  dear, 
and  national  industry  unable  to  compete.  You  have  the  most  common 
things  of  absolute  necessity  at  the  price  they  cost  when  they  were  in- 
vented, equal  to  those  charged  in  besieged  towns,  or  in  the  deserts  near 
the  savages.  Why?  Study  and  compare  your  actual  system.=  No 
doubt  that  capital  as  an  element  for  industry  is  cheaper  in  Europe,  but 
for  an  enterprise  that  invests  a hundred  thousand  dollars  the  difference 
is  only  five  thousand  dollars  a year ; at  the  same  time  the  difference  in 
wages,  taxation  and  expenses,  is  many  times  more. 

Do  you  not  think  that  the  cost  of  interest  would  be  less  by  the 
changes  I have  proposed  ? Then  the  difference  could  be  reduced  or 
annulled. 

If  you  abolish  your  laws  that  forbid  a foreigner  to  own  real  estate ; 
laws  that  I cannot  conceive  of  in  the  present  century,  and  in  the  land 
of  liberty;  the  question  of  changing  nationality,  which  is  as  dear  to 
certain  classes  as  religion  and  name,  you  could  attract  much  capital.  If 
in  buying  real  estate  the  wife  was  not  the  owner  of  one-third,  and  you 
did  not  require  her  consent  to  realize  your  speculation,  as  you  permit 
her  to  realize  her  property,  there  would  be  another  inconvenience  less, 
as  the  senior  should  be  the  senior. = But  I have  deviated  from  my  prin- 
cipal object,  that  of  protecting  agriculture  and  industry  more  efficacious- 
ly by  giving  them  at  cheaper  rate  the  most  important  element — viz., 
salary. 

I have  expected  to  enable  you  to  have,  as  the  only  source  of  revenue, 
the  Custom  Houses;  but  respecting  their  object,  that  must  be  a purely 
fiscal  one.  Rather  than  to  have  a dictionary  of  classifications,  and  for 
even  the  greatest  complication,  I would  reduce  them  to  only  twenty  at 
most  in  round  figures,  freeing  all  raw  materials  required  for  agriculture, 
manufacture,  and  the  industry  of  ship  building  especially,  which  em- 
ploys so  many  men ; and  all  things  necessary  to  make  the  cost  of  living 
cheap,  and  consequently  salaries. 

I hear  everywhere  that  you  have  a large  debt,  and  that  it  is  the  cause 
of  all  your  troubles.  But,  as  the  debt  of  Great  Britain  is  greater,  and 
more  than  double  that  of  France,  this  is  no  reason  at  all. 

The  greater  simplification  in  your  tariff  would  reduce  the  cost  of 
time  : and  therefore  collecting  less,  but  expending  still  less,  you  could 
net  more,  and  the  net  is  the  real  revenue.  How  many  taxes  could  you 
abolish,  which  taking  into  account  the  cost  of  collecting  and  rent  of 
public  buildings,  pay  nothing,  or  almost  nothing,  net  ? The  abolition 
of  such  taxes  would  mean  no  loss  for  the  Treasury. 

What  is  indubitable  is,  that  if  on  an  average  every  inhabitant  can 
only  pay  ten  dollars  taxes,  the  total  will  not  be  more  if  you  combine 
ten  different  taxes  instead  of  one,  and  the  cost  of  collecting  would  be 
less  in  proportion.  Custom  Houses  could  be  the  only. 

I have  said  enough  to  demonstrate  that  I am  not  an  absolute  free 
trader,  since  I propose  Custom  Houses  as  the  only  source  of  revenue  in 
the  actual  condition  of  the  country.  Later,  perhaps,  if  you  agree  that 


7 


agriculture  is  the  real  source  of  wealth,  and  can  contribute  more  econo- 
mically, directly  than  indirectly,  you  could  come  to  a better  plan,  that 
of  having  a simple  tax,;  according  to  the  circumstance  of  every  State, 
to  be  levied  on  the  most  important  article,  and  with  such  a simplifica- 
tion, the  National  Banks  could  make  the  collection. 

I will  allow  myself  a last  observation.  What  would  you  do  if  Europe 
in  one  year,  instead  of  being  paid  the  200  millions  of  yearly  interest, 
with  other  bonds  and  mortgages,  should  ask  of  you  the  payment  in 
produce,  and  principally  in  gold  ? How  could  you  operate  your  Cus- 
tom Houses,  which  receive  only  gold  ? 

=The  only  resource  would  be  to  accept  legal  tenders,  or  issue  gold 
notes.  Better  then,  to  be  prepared  for  an  emergency  that  is  not  proba- 
ble, but  that  is  possible.  You  would  be  prepared  for  the  worst,  if  you 
should  adopt  the  plan  proposed. 


VI. 

I have  made  an  allusion  to  Cuba,  where  I have  lived  almost  all  my 
life.  All  horrors  of  blood  and  butchery  of  children,  ladies,  and  old 
men,  are  giving  to  your  neighborhood  the  most  repugnant  of  all  spec- 
tacles. Cubans  are  your  brothers,  as  the  nearest  neighbors,  and  when 
you  have  visited  Cuba  you  have  had  the  best  bed  of  the  house  offered 
to  you,  the  best  carriage  to  drive  in. 

But  I did  not  intend  to  invoke  your  humanity,  or  duty,  or  generosity ; 
I am  treating  here  only  of  your  interest.  This  interest  is  to  intervene 
morally,  or  at  least,  put  in  peace,  the  two  contending  parties,  to  stop 
the  destruction  of  wealth.  Cubans  produce  what  you  want  as  neces- 
saries, sugar  and  molasses  are  raw  materials  for  your  industry  of  re- 
fining. In  these  circumstances  you  can  prepare  or  realize  a treaty  of 
commerce  by  which  Custom  Houses  would  be  abolished  in  Cuba ; in  re- 
ciprocity you  would  abolish  duty  on  the  imports  of  their  sugars,  mo- 
lasses, and  leaf  tobacco.  You  would  realize  the  most  important  advan- 
tage of  the  political  annexation  by  the  economical  annexation,  and  the 
markets  of  Cuba  would  be  open  to  you  as  freely  as  any  another  State. 
Naturally,  the  coastwise  commerce  of  Cuba  would  be  limited  to  the 
producers  of  their  soil ; for  you  would  be  undetermined  and  absolute 
the  same  for  Great  Britain  and  other  people,  including  Spain. 

I have  given  you  the  means  of  making  great  economies  that  would 
permit  you  the  abolition  of  taxes ; but  suppose  that  the  rings,  in  their 
principle  of  “ Apres  moi  le  deluge,”  would  oppose  the  general  plan,  you 
could  abolish  the  duties  on  sugar,  etc.,  and  reestablish  them  on  tea  and 
coffee,  that  are  no  raw  materials  for  your  industry,  and,  I think  that 
the  importers  of  tea  and  coffee  would  be  glad  of  it. 

You  must  encourage  the  change  of  labor  in  free  labor  in  the  way 
proposed  above.  Then  the  economy  to  be  made  by  the  Cuban  planters, 
and  every  Cuban,  in  the  cost  of  living,  of  salary,  and  of  producing,  at 
the  same  time  that  the  better  price  for  sugars,  would  permit  to  keep 
the  actual  production,  and  increase  it  gradually  as  your  increasing 
population  would  demand. 


8 


Naturally,  too,  the  abolishing  duties  on  sugar  would  be  without  dis- 
tinction of  proceeding,  if  you  please  respect  the  rights  of  most  favored 
nations. 

I have  no  object  in  what  I have  written,  either  pecuniary  or  other 
kind,  except  to  submit  my  lucubration  to  your  capacities.  Then, 
please  excuse  any  allusion  that  could  be  interpreted  in  any  other  sense 
than  the  best  intentions.  As  an  exile  from  Cuba,  having  attracted  the 
hate  of  those  living  as  improductive  against  the  community,  I desire  to 
live  in  peace  with  every  one. 

M.  de  EMBIL. 


New  York , April  1th , 1873. 


P.  S.  Sugar  is  the  only  necessary  that  pays  import  duty  in  England. 
As  they  do  not  fear  competition  in  agriculture  or  in  manufactures,  all 
the  others  are  free  of  duty.  In  1870  they  reduced  the  duty  one-half, 
and  now  they  take  off  another  half,  leaving  only  one-fourth  of  what  was 
the  duty  in  1870.  The  Chancellor,  Lowe,  said  that  the  reduction  was  in- 
tended to  help  producers  that  were  to  change  their  slave  labor  into  free 
labor.  Cubans,  as  sons  of  Spain,  have  given  example  to  the  mother 
country  how  to  produce  and  sell  at  a less  price  than  their  competitors. 
Are  you  in  the  opposite  case,  as  grandsons  of  Great  Britain  ? If  you 
wanted  half  a century  to  abolish  slavery  at  their  example,  being  mean- 
time a sarcasm  on  a Republic  with  slavery,  and  thirty  years  have  passed 
already  since  they  agreed  on  the  advantages  of  free  trade,  will  you 
want,  to  complete  too,  half  a century  to  follow  their  example  ? 


New  York , April  11,  1873. 


9 


New  York,  May  2nd,  1873. 

As  I have  some  reason  to  know  that  the  plan  of  abolishing  all  taxes, 
except  those  levied  through  the  Custom  Houses,  is  accepted  in  princi- 
ple, I must  add  some  indications. 


VII. 

On  page  4 I have  said  that 

$100,000,000  surplus  would  permit  the  abolition  in  taxes  of  $130,000,000 
$33,000,000  saved  in  interest  permits  the  abolition  in  taxes  of  $66,000,000 
and  as  on  the  duties  remaining  you  could  get  an  increase  of  $24,000,000 

$220,000,000 

thus  permitting  the  abolition  of  two  hundred  and  twenty  million  dollars 
of  taxes,  and  retaining  only  Custom  House  duties. 

As  the  total  Internal  Revenues  only  give  a gross  amount  of  one  hun- 
dred and  thirty-one  and  three-quarter  millions,  including  sixteen  mil- 
lions for  stamps,  (in  1872),  the  abolition  of  all  Internal  Revenue  taxes, 
except  a Postage  Stamp  of  two  cents  for  each  letter  of  one  ounce  to 
any  part  of  the  country,  would  only  be  a reduction  of  one  hundred  and 
twenty-five  millions  of  receipts,  and,  if  we  take  into  consideration  what 
the  hundred  and  twenty-five  million  leave  net , it  would  frighten  no  one 
should  all  Internal  Revenue  taxes  be  abolished  at  once.  After  deduct- 
ing this  $125,000,000  we  still  have  $95,000,000  of  the  $220,000,000,  and 
for  this  sum  we  could  do  away  with  the  duties  in  the  tariff  on  sugar, 
tobacco,  iron,  wool,  &c. 

Wool  pays  a duty  as  raw  material,  and  also  as  a manufacture,  and  in 
buying  the  raw  material  at  a high  price,  and  in  selling  it  at  one  equally 
high,  the  only  result  to  the  manufacturer  is  that  he  realizes  less  from 
his  sales  and  employs  more  capital. 

In  their  abolition  you  would  have  a deficiency;  but  in  the  other  left 
as  paying  duty  you  would  have  an  increased  consumption  and  twenty- 
four  million  dollars  more  of  revenue. 

Any  one  will  agree  that  in  return  for  so  much  good  done  for  them  the 
community  would  make  up  a part  of  the  two  hundred  and  twenty  mil- 
lions saved  them  in  taxes,  by  increasing  the  consumption  of  the  various 
commodities,  by  enterprise,  and  by  capitalization.  This  return  would 
determine  the  subsequent  surplus,  and  the  subsequent  abolitions,  an- 
nually greater  in  the  gross  amount. 

VIII. 

This  natural  surplus  as  a consequence  of  prosperity,  could  later  be 
applied  also  to  the  gradual  reduction  of  the  public  debt,  paying  interest, 
and  also  of  that  in  currency,  when  gold  will  again  come  into  circulation 
and  when  you  shall  have  changed  your  regulation  of  the  sales  of  stocks 
requiring  only  the  payment  of  differences  or  margins,  instead  of  the 
daily  delivery  and  payment  of  full  value. 

The  two  systems  of  taxation,  direct  and  indirect,  contradict  each 
other.  If  you  leave  only  the  Custom  Houses,  you  have  also  the  Post 


10 


Offices,  property  of  the  States,  the  sale  of  public  lands  and  other  sources 
of  revenue. 

IX. 

For  the  settlement  with  the  banks,  in  cancelling  the  three  hundred 
and  fifty  millions  of  Five-Twenties  which  now  cost  twenty-one  millions 
in  interest,  you  could  prepare  the  way  by  giving  them  fifty  millions  in 
currency,  taking  the  bank  notes,  and  the  five-twenties  will  be  cancelled 
at  the  same  time.  Meanwhile,  as  the  bank  notes  are  guaranteed  by  the 
five-twenties  deposited,  there  is  no  risk.  In  such  a condition  of  things, 
you  could  call  in,  for  payment,  the  series  of  five-twenties  held  by  the 
banks,  and  as  they  would  not  like  to  be  called  at  the  last,  when  gold 
had  a small  premium,  you  could  buy  from  every  bank  for  the  amount 
of  bank  notes  changed. 

As  soon  as  authorized  to  issue  more  currency,  you  would  extend  the 
amount  of  exchanges,  and,  as  before  said,  would  buy  as  much  as  offered 
in  the  open  market,  paying  in  currency,  and  issuing  the  required  amount. 

If,  instead  of  a fixed  time  of  thirty  years  for  your  bonds,  you  should 
offer  a consolidated  perpetual  debt,  you  could  refund  five  hundred  mil- 
lions at  four  per  cent,  interest,  instead  of  six,  saving  ten  millions  a year 
which  would  not  prevent  you  from  purchasing  in  open  market,  and  can- 
celling as  at  present  done. 


X. 

The  effect  of  the  proposed  abolition  of  taxes  is  to  be  further  indi- 
cated. Spirits  and  fermented  liquors,  when  free  from  Internal  Revenue 
taxes  would  favor  the  farmers  producing  the  raw  materials  used  in  the 
manufacture,  and  at  the  lower  , rates  of  labor,  the  reduced  cost  would 
permit  competition  and  export.  It  would  be  the  same  with  refined  su- 
gars. You  could  import,  if  you  wished,  the  entire  sugar  crop  of  Cuba, 
and  reexport  it  in  refined  grades.  You  could  also  import  the  entire  to- 
bacco crop  of  Cuba,  and,  abolishing  Internal  Revenue  taxes  on  tobacco, 
the  domestic  produce  would  gain  in  price,  and,  at  the  same  time,  cigars 
could  be  exported.  For  foreign  cigars  it  would  be  better  to  resume  the 
import  duty  than  to  have  the  cost  of  collecting  the  two  taxes  tobacco 
now  pays. 

Gas  is  a necessary  article,  and  could  be  more  generally  used  in  cook- 
ing, &c.,  than  at  present.  You  could  negotiate  a reduction  in  price  and 
favor  the  producer  of  coal,  the  gas  companies,  and  the  consumers. 

You  require  the  assistance  of  the  banks  to  accomplish  reform.  The 
tax  of  four  and  a half  millions  would  also  be  abolished. 

* Stamps  for  matches,  &c.,  are  ridiculous  : there  should  be  none  except 
for  postage,  and  they  should  be  sold  at  a uniform  rate  of  two  cents  per 
ounce  weight  for  letters  to  any  part  of  the  country. 


XI. 

The  difficulties  now  existing  between  the  formers  and  the  railways  of 
the  West  would  settle  themselves.  Since  iron,  as  a raw  material  would 
be  cheaper  to  the  manufacturers,  and  as  rails,  steel,  labor,  &c.,  would  be 


11 


cheaper,  new  lines  could  be  built,  and  those  in  existence  could  reduce 
the  expense  of  repairing,  of  extension,  and  of  service,  and  at  a lower 
tariff,  could  pay  equal  or  better  dividends. 

The  industry  of  ship-building  when  all  duties  on  raw  materials  are 
abolished,  could  cheapen  the  cost  of  labor  favoring  lumber,  &c.,  and  the 
export  of  vessels  could  be  extended.  In  the  same  way  with  spirits, 
manufacture,  refined  sugars,  and  cigars,  increasing  products  of  agricul- 
ture would  permit  you,  before  long,  to  meet  the  amounts  of  your  ex- 
ports and  exterior  debt. 

XII. 

The  British  Consols  at  3 per  cent,  interest  have  an  equal  value  with 
your  Five- Twenty  Bonds  which  pay  double  the  interest.  Your  credit 
is  only  half.  Why  ? Because  the  investors  in  your  Five-Twenties  are 
afraid  of  being  called  upon  to  receive  their  par  value,  and  there  is  no 
object  for  them  to  purchase  in  the  hope  of  securing  a permanent  in- 
come for  their  sons  and  grandsons. 

Even  in  this  country,  owners  of  real  estate  and  others  would  agree 
to  exchange  bonds  bearing  6 per  cent,  interest  for  others  bearing  4 per 
cent.,  since,  in  saving  $1,000  in  taxation  on  $50,000,  their  property 
would  yield  $1,000  more  net  revenue,  and  would,  on  the  basis  of  10  per 
cent,  interest  be  worth  $10,000  more.  No  patriotism,  merely  common 
sense  is  required. 

The  saving  every  one  would  make  in  taxes,  in  the  over  price  of  $4 
each  now  paid  for  hats,  etc.,  etc.,  would  alone  allow  them  to  pay  better 
rents  for  houses.  At  less  rates  of  salary,  bricks,  etc.,  would  be  cheaper, 
lots  of  land  would  be  more  saleable,  and  the  old  parts  of  the  city  could 
be  transformed  as  was  done  with  Paris. 

XIII. 

There  is  an  error  in  the  theory  of  government  which  has  reached  its 
highest  abuse  in  this  country,  namely,  that  of  thinking  that  the  greater 
the  army  of  public  officers  or  politicians,  who  cost  money  and  time  to 
the  community,  the  greater  is  the  support  to  the  administration.  As  every 
public  office  has  at  least  five  aspirants  for  the  position,  four  of  them 
must  be  disappointed  and  become  perpetual  opponents  to  the  adminis- 
tration, since  they  hope  eventually  to  receive  a place  if  they  make 
themselves  feared.  The  more  you  leave  to  private  enterprise  the  better 
it  is  for  the  administration,  the  less  calumnies  be  invented  and  the  less 
opposition  there  is  to  the  good.  Your  grandfathers  were  wiser,  for  with 
them  a change  of  ministry  produced  only  a change  of  private  secretaries. 

You  require  a criminal  code  modeled  on  that  of  the  First  Napoleon 
of  France,  applicable  to  all  the  States  of  the  Union ; then  the  solution 
of  every  case  would  be  simple  and  justice  could  be  obtained  instead  of 
doubts,  looking  for  analogies. 

During  the  Prussian  war  sixty-two  thousand  Americans  were  resid- 
ing in  Paris,  spending  their  revenues  and  energy.  They  stated  that 
they  there  enjoyed  greater  religious  freedom  than  here,  and  that  ac- 
cording one.hour  to  church,  they  had  fifty-two  days  more  in  the  year 


12 


for  promenades,  concerts,  theatres,  balls,  learning  in  the  museums  of 
pictures,  sculptures,  architecture,  etc.  In  these  fifty-two  days  those 
that  during  the  week  were  confined  by  their  duties,  have  a moment  of 
expansion  for  singing,  dancing  and  mixing  with  refined  people. 

You  can  abolish  two  hundred  and  twenty  millions  of  taxes,  reduce 
your  cost  of  consumption  five  hundred  millions  and  use  this  capital  at 
an  interest  of  thirty-five  millions  a year  and  you  can  avoid  the  increas- 
ing exterior  debt  at  the  rate  of  one  thousand  millions  every  four  years. 
Instead  of  all  the  important  calamities  of  the  war  amidst  peace,  you 
can  enjoy  the  advantages  of  peace.  For  this  you  only  want  union 
under  the  flag  of  free  trade,  organize  your  league  and  its  organ,  which 
could  be  called  the  Economist , demonstrating  clearly  what  efficacious 
protection  to  national  industry  means  and  what  spoliation  and  pillage 
means.  Do  not  longer  allow  those,  who  declare  themseves  stupid  and 
unable  to  accomplish  the  same  things  as  other  people  under  equal 
circumstances  of  taxation,  to  remain  your  masters,  and  keep  you  as 
their  slaves  deprived  of  the  most  sacred  right,  that  of  buying  where  you 
can  buy  cheapest. 

The  abolition  of  negro  slavery,  giving  to  the  blacks  immediate 
political  privileges  even  when  they  can  neither  read  nor  write,  cannot 
be  accepted  as  producing  the  enslavement  of  their  emancipators. 

Cuba  could  give  you  another  still  plainer  system  of  taxation.  As 
besides  post-offices  lottery,  property  of  the  State,  they  do  not  get  seven 
millions  net  from  all  the  other  taxes  of  customs,  etc.,  then  the  only  tax 
of  two  dollars  a box  of  sugar  produced  would  give  them  seven  millions 
that  they  could  collect  by  the  Banks  in  the  only  1,100  receipts  required. 
I have  advised  you  to  make  a treaty  of  commerce  with  Cuba  which 
would  give  the  most  important  advantages  of  the  political  annexation 
in  the  economical  annexation  by  the  abolition  of  Custom  Houses  in 
Cuba. 

As  I have  said  above  that  the  internal  revenues  only  amount  to 
131f  millions,  gross,  they  were  in  1872,  49 1 for  spirits,  33 \ fermented 
liquors,  8£  tobacco,  4|  Banks  and  Bankers,  2f  gas,  16£  stamps,  21- 
other  sources  and  penalties. 

If  you  desire  to  know  the  negative  effect  of  the  actual  system,  know 
that  in  1872  you  could  only  export  870  yards  of  carpets  for  Mexico, 
Cuba,  Sandwich  Islands.  In  the  articles  of  books,  candles,  clothing, 
copper  and  brass,  manufactured  cotton,  iron  and  woollen,  boots,  shoes, 
household  furniture  gunpowder,  paints  and  varnish,  printing  presses, 
type,  instead  of  25f  millions  dollars  in  1860,  you  have  only  exported 
10f.  The  petroleum,  breadstuffs,  gold  and  silver,  provisions,  leaf 
tobacco  and  lumber,  precisely  what  is  not  protected,  on  the  contrary, 
have  provided  an  excess  of  176  millions.  (See  the  World  of  April  28). 


